In 2008 a certain Satoshi Nakamoto released the Bitcoin whitepaper and that single act revolutionized the financial market and the world economy. Bitcoin is considered as the first popular cryptocurrency, but according to research there were other cryptocurrencies before the advent of Bitcoin – but they were either called internet money or virtual money and not the famous cryptocurrency.
If you want to know about cryptocurrency you need to understand everything about it and this means you need to know what we call blockchain technology – the platform where Bitcoin and other cryptocurrencies are built upon.
Blockchain is basically the bank (where cryptocurrency is built on) while cryptocurrency is the cash that keeps the bank operating smoothly – it’s a mutually beneficial relationship.
What is Blockchain
Blockchain is a decentralized ledger where cryptocurrency transactions are stored. To explain this in simpler terms – you understand what a ledger is, right. For those who don’t know – a ledger is a piece of document where transactions in a company is recorded and can be referred to in the future for verification purpose.
Blockchain acts like a ledger, but on the internet, and the term decentralized simply means the transactions isn’t stored on just one server but several servers located in different parts of the world and connected through a network of nodes.
Cryptocurrencies are built on this blockchain network and act as the native currency that is used for transactions on the blockchain network.
There are different types of blockchain network, the most popular of them being the Ethereum Blockchain Network – which houses more cryptocurrencies and DApps (Decentralized Applications) than any other blockchain network in the world.
To know more about Blockchain technology you can head to www.cointelegraph.com to learn more about Blockchain technology and how it works.
What is cryptocurrency
Cryptocurrency as the name suggests is basically money encrypted with cryptography. If you’re new to the world of cryptocurrency and you’re trying to understand what the fuss is all about, the first thing you’ll probably do is Google what cryptocurrency is. You’ll get answers like this “cryptocurrency is a digital assets that also serves as a medium of exchange and uses cryptography to secure its transactions and verify the transfer of assets.
A cryptocurrency (or crypto currency) is a digital asset designed to work as a medium of exchange that uses strong cryptography to secure financial transactions, control the creation of additional units, and validate the transfer of assets on the blockchain network.
In simpler terms cryptocurrency is money – albeit virtual that powers a blockchain network. It can be stored like you store you American dollars in the bank, it can be exchanged just like native currency and it can be used to purchase goods and services, all on the internet. It cannot be printed into a piece of paper like the traditional US dollar.
Let’s take Bitcoin (the most popular cryptocurrency) for example – it can be stored on a special blockchain wallet, it can be exchanged for fiat currency and exchanged for other cryptocurrencies on what is called an exchange (platforms where cryptocurrencies are bought and sold), and it can be used to purchase goods and services from merchants who receive cryptocurrencies as forms of payment.
How do you acquire cryptocurrency?
Whenever a new cryptocurrency enthusiast learns about cryptocurrency and the power it holds the next thing they think of is how to have their own crypto. In this section of the article we will be telling you the different ways you can buy and own your own cryptocurrency and start making massive profits from it if possible.
As a newbie cryptocurrency enthusiast the first cryptocurrency you’ll probably have contact with or hear about more often than others is Bitcoin. To own Bitcoin you need to have a Bitcoin wallet.
What is a Bitcoin Wallet?
A Bitcoin wallet is basically a virtual online store (and also offline) where you can store your cryptocurrency like Bitcoin, Ripple, Ethereum. The most popular wallet to store your Bitcoin and Ethereum is the Blockchain wallet. There are several types of wallet, there is a cold storage wallet like Nano Ledger and Trezor where you can store your cryptocurrency.
It looks just like a USB drive and can be accessed with a passkey that only you know. Then there’s the hot storage wallet like the blockchain wallet (a hot wallet is any wallet that’s connected to the internet).
Getting a cryptocurrency wallet is the first step to owning cryptocurrency, the next step is to actually own one. There are several ways to own cryptocurrency, either you buy or you work for it – the first option is easier since you’re a newbie to the game.
To buy cryptocurrency you need to register on platforms like Coinbase, Luno or Localbitcoin.com where you can buy cryptocurrency assets directly with your local currency. All you have to do is sign up an account, verify your account and choose the cryptocurrency asset you want. When you pay for it the token is sent to the Bitcoin wallet address you provided during the purchase… voilà you have bought your own cryptocurrency.
Advantages of cryptocurrencies
Security: One of the major pros of cryptocurrency is the fact that it is a secured means of storing assets. Cryptocurrency stored in your wallet (cold wallet) is almost impenetrable to hackers and online thieves, es unlike your credit card that is vulnerable to phishing.
Easier international transaction: With cryptocurrency it is easier to trade internationally than using fiat currency that’s saddled with so many restrictions. With cryptocurrency you can send money for goods and services to your business partner anywhere in the world, it will just take minutes for the transaction to go through.
Lower transaction fee: Crypto transactions attract lower fees than normal transactions done in traditional banks. Let’s take international transactions as an example – you’re charged an arm and a leg to send money internationally butwithcryptocurrencyc,y the charges are usually very little or nonexistent at all.
Disadvantages of cryptocurrency
Cybersecurity Issues: Cryptocurrency’s biggest strength is also its biggest weakness – security! In these times of sophisticated thievery by cybercriminals, cryptocurrencies and cryptocurrency exchanges have suffered the most – with coordinated attacks on cryptocurrency assets and the stealing of millions of dollars worth of cryptocurrency.
Volatility: For cryptocurrency lovers and traders this is perhaps the biggest disadvantage of owning a cryptocurrency. It’s too volatile. You can own $10 worth of cryptocurrency and in one-minutes market forces can bring it down to $2 or pump it up to $20. The price volatility is affecting it from being massively adopted.
Scalability: This disadvantage prompted the Oracle of Omaha (Warren Buffet) to declare cryptocurrency as a bubble. Cryptocurrency isn’t scalable yet and can’t match financial giants like MasterCard and Visa in terms of speed of transaction and the number of transactions it can handle in a minute.
Potential danger and rewards of cryptocurrencies.
Cryptocurrency has its pros and cons, there are dangers associated with the mainstream adoption of cryptocurrency and also rewards associated with owning virtual currencies. Cryptocurrency has been known to power the dark web, human traffickers, terrorists, child traffickers, drug lords, illegal weapon peddlers have all known to favor cryptocurrencies as the best form of conducting their business because of the anonymity it provides them when they transact.
This prompted several governments to place some sort of regulations on cryptocurrencies and has affected the growth of the cryptocurrency community in that country.
The rewards of owning a cryptocurrency are simple, you have a chance to make a fortune if you own cryptocurrency. Either through investing your tokens, trading it or just holding on for dear life (HODL).
Cryptocurrency has changed the world, changed how we see the financial service sector and thousands of startups have sprung up since the rise of this new currency – creating hundreds of thousands of jobs in the process and also creating thousands of millionaires and even billionaires. Cryptocurrency is here to stay so why not get with the flow when you still have time and see yourself get rewarded in the process